March 14, 2014

Uganda’s Oil Refinery To Be In Buseruka Sub-County, Hoima

Government has met with representatives of the companies that bid to construct an oil refinery in Kabaale Parish, Buseruka Sub-County, Hoima District.

An oil well undergoes testing in the Lake Albertine region of western Uganda in this 2010 file photo. (AP / Monitor Publications Ltd)
An oil well undergoes testing in the Lake Albertine region of western Uganda in this 2010 file photo. (AP / Monitor Publications Ltd)

The pre-bid conference on Wednesday was a closed door session.  However, Eng. Irene Muloni, the Minister of Energy and Mineral Development, revealed in a statement that they had discussed the specifications of the oil refinery and oil sector in Uganda in general.

Muloni said they discussed the proposed project structure, base case configuration and addressable market for the refinery, the relevant Agreements, and the scoring criteria for both technical and financial proposals.

In December 2013, the government shortlisted five consortia and an individual firm that expressed interest to construct a 60,000 barrels per day refinery. There is a consortia led by China Petroleum Pipeline Bureau from China, Petrofac from UAE, RT–Global Resources from Russia, Vitol SA from Switzerland, SK Energy from South Korea and Marubeni Corporation from Japan.  One of these will be a 60percent investor in the proposed refinery.

The best evaluated bidder is expected to be announced in June 2014, according to Minister Muloni’s statement.

Muloni offered assurance to the process, indicating that there was a commitment to making the process transparent. Projects like the Karuma and Bujagali Hydro Power dams among others had been dogged by delays, due to a process tainted with bribery and influence peddling accusations.

The bidders are also expected to visit the proposed refinery site, oil fields and also meet with oil companies, CNOOC, Tullow and Total. By 16th April 2014, the companies are also expected to have submitted detailed proposals on the design and how they will source for funds for the construction of the refinery.

Robert Kasande, the Refinery Project Manager at the Ministry of Energy, says the shortlisted bidders will, in addition, submit a financial plan highlighting how they intend to raise funds for the project. They are also expected to document their plan for crude oil procurement together with their plans for sale, and marketing of refined products. He also said that the proposals should include a “local content strategy that illustrates how the bidders intend to maximize use of Ugandan employees and resources.”

Uganda’s oil reserves are estimated to be 3.5billion barrels, with recoverable oil projected to be 1.7billion barrels. The Uganda government has always insisted on constructing an oil refinery in order to rid the country of fuel imports that totaled one trillion Uganda Shillings in 2013, according to Bank of Uganda (BOU). Currently, people occupying 29 square kilometres of land in Kabaale Parish where the refinery is to be constructed, are being compensated whereas others will be resettled.

Information about the bidders:

1.   China Petroleum Pipeline Bureau (CPPB) led consortium

CPPB was established in 1973, as pipeline engineering company under the China National Petroleum Corporation (CNPC). CPPB has a complete pipeline construction industry chain with core technologies from pipeline research, survey, consultation, engineering, procurement, Construction, commissioning, operation as well as maintenance. The company has executed major projects in India, Chad, Kenya, Thailand, Mozambique and China, among others. The Company’s net worth was about USD 2.1 Bn in 2013. The other companies with refining expertise in the consortium include:

Wuhan Petrochemical Engineering Design Company Limited

China Petroleum Jilin Chemical Engineering and Construction Company Limited, and

Shandong Dongming Petrochemical Group Company Limited

2.   Marubeni Corporation

Marubeni Corporation has invested in power projects, refineries, petrochemical plants, upstream asset and gas infrastructure, logistics, and construction. The company has invested in key infrastructure projects and collaborated with major international oil developers, independent oil developers, and resource development companies in many countries, including the United States, the UK, India, Qatar, Russia, and Kazakhstan to conduct exploration, development, and the production of oil, gas and uranium. The Company’s net worth stands at 12.64 Bn USD as of March 2013.

3.      Petrofac led Consortium

PETROFAC is a Tier 1 international company that has a track record of success in delivering multibillion projects in oil and gas. PETROFAC operates in the UK, Middle East, North Africa, West Africa, Central America and Asia. PETROFAC was listed on the UK stock market in 2005 and has a net worth of 1.55 billion USD in 2013.  Members of the Petrofac led consortium include;

Haldor Topsoes, a Danish catalysis company that specialises in the design of process plants based on catalytic processes.

Glencore Xstrata Plc, a global diversified natural resource companies and is one of the biggest companies within the FTSE 100 Index

Springwood Capital LLP, an investment advisory firm that specialises in emerging African markets to offer the best opportunities for growth.

4.      RT – Global Resources led consortium

RT Global resources, a subsidiary of Rostec which is one of Russia’s national oil companies, is a state international (export) investment development company that finances large infrastructure projects. The corporation’s net worth stood at 11.6 Bn USD during 2013. Total investments of the RT Global resources in infrastructure projects in various sectors in the last 10 years exceeds USD 15 Bn USD. One of the members in the consortium commenced the construction of a 140,000 bbl/day refinery project in Russia in 2005, among other key projects.

Other members of the Consortium include;

VTB Capital Plc which is Russia’s national leader in global investment banking that offers a full range of investment banking products and services.

JSC Tatneft an oil and gas company with experience in exploration and production, refining and marketing and petrochemicals, among others.

 

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